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Senate Finance Committee Talks over Entitlement Changes

By John Reichard, CQ HealthBeat Editor

October 11, 2013 -- Republicans and Democrats on the Senate Finance Committee agree: It's time to talk about changes to entitlement programs.

Based on a hearing held by the committee last week, those changes could involve savings of up to half a trillion dollars over the next decade. Seniors could see a slower increase in Social Security checks. They might have to put up with Medigap policies that cover less.

The well-to-do elderly might have to pay higher Part B and Part D premiums in Medicare. And hospitals could see reduced reimbursements for patients who don't pay their medical bills.

Those are among the changes that either Finance Committee Republicans or the White House have proposed to put entitlement programs on a sounder footing. And they may be more likely now than a few months ago.

Finance Committee Democrats haven't been as specific about changes they'd make, but they say they'd be willing to make cuts if Republicans would boost revenues.

"Working together, we must address the nation's long-term budget challenges, including entitlement and tax reform," Committee Chairman Max Baucus, D-Mont., said at the hearing. The panel heard from Treasury Secretary Jacob J. Lew, who warned of the perils of failing to raise the debt ceiling.

But the need to address entitlements was on the minds of senators, particularly Republicans.

What the committee and other lawmakers, such as House Budget Committee Chairman Paul D. Ryan, R-Wis., say about making those changes is taking on new relevance.

That's because the White House and Congress may be on course toward negotiations this fall over such entitlement programs as Medicare and Social Security. Republicans have leverage to force those talks because their votes are needed to keep funding the federal government and lift the debt limit.

Sen. Rob Portman wondered at a recent hearing whether President Barack Obama might be willing to cut up to $500 billion from such spending over the next decade.

Obama's fiscal 2014 budget proposal "includes a pretty long list of entitlement savings, mandatory savings, adding up to about $730 billion over 10 years," Portman said.

The Ohio Republican called that "a step in the right direction." And Portman wondered "couldn't we move forward" by taking some of Obama's proposals, maybe $400 billion or $500 billion worth, and adding them to legislation lifting the debt ceiling.

The committee's top Republican, Sen. Orrin G. Hatch of Utah, called attention to five entitlement changes he has proposed, calling them bipartisan. They include allowing private health plans to compete with traditional Medicare, gradually increasing the eligibility age to 67, limiting what out-of-pocket payments Medigap could cover, combining the Medicare Part A and Part B deductible and establishing per capita caps in the growth of Medicaid spending.

Hatch and Sen. Charles E. Grassley, R-Iowa, expressed frustration with Obama for not responding to these proposals.

When Lew said the president has been willing to negotiate, and offered serious entitlement proposals in his fiscal 2014 budget, Grassley said that restating Obama's budget proposal wasn't true negotiation.

Lew countered that Obama has "always been willing to negotiate, just not with the threat of destroying our economy" hanging over him, a reference to Republican objections to raising the debt ceiling without major spending cuts.

Like Baucus, Lew said there could be "a serious conversation" if discussion of entitlement changes and tax changes are paired. And Lew said repeatedly that such discussions could not occur until the government has been reopened and the debt ceiling lifted.

Clearly there is a long way to go in the negotiation process before any entitlement changes actually would be made. But for now at least, it appear those discussions will occur this fall.

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